Monthly Macro Dashboard: IIFL Capital Services

24 May 2023 , 10:28 AM

Highlights: 1) Industry credit continues to decelerate (5.7% YoY in April), while overall credit remains buoyant. 2) Consumer sentiments continue to improve and Services PMI came in at a 13-year high of 62. 3) Trade balance improved to US$ -15.2 billion in April (versus -18.6 billon in March), as both Oil and Gold imports drop. 4) US retail sales grew by a meagre 1.6% YoY in April, remaining negative in real terms; US money supply has now seen contraction for 6 months in a row. 5) Oil has dropped to $75/bbl currently, as has LME Index (currently at 3722). CRB Food Index remains static.

• In March 2023, IIP came in at a mere 1.1% YoY. At 8.1% YoY, Capital Goods growth remained decent; Consumer Goods contracted 5.3% YoY driven by 8.4% contraction in Durables. Coal/Steel production stays reasonably strong with YoY growth of 12.2%/8.8% in March, but Cement production decreased by 3.1% YoY. Bitumen consumption continued to witness slowdown in April (-8% YoY), while Railway freight traffic grew a modest 3.5% YoY.
• PV sales growth came in at 12.9% YoY in April (versus 4.6% YoY in March), on a relatively low base. 2W sales growth accelerated to 16.5% YoY in April versus 9% YoY in March. Tractor sales growth declined 11.1% YoY (versus +13.7% in March), as base catches up. Petrol consumption grew 2.8% YoY, while diesel saw a decent 8.6% YoY growth.
• For Rural (especially Agri) – fertilizer consumption grew by 19% YoY in March (versus 10% YoY in February). Overall unemployment increased to 8.1% in April (versus 7.8% in March). Urban unemployment jumped to 9.8% (versus 8.3% in March), while Rural remained at 7.3%. MNREGA demand rose to 32 million in April (from 28 million in March), but is down 3.4% on a YoY basis. Strength in Agri credit growth holds steady, coming in at a record 15.4% YoY in March.
• M3 grew by 9.5% YoY in April and CD ratio came in at 75.7. Deposits went up by 10.2% YoY, while credit growth stayed strong at 16.1% YoY. Sectorally, industry credit growth seems to be losing pace every month compared to others, growing at merely 5.7% YoY in March (versus 7% YoY in February). Other sectors continue to see buoyant credit growth of ~20% YoY.
• Manufacturing PMI expanded to 57.2 in April (versus 56.4 in March), while Services PMI climbed to a 13-year high of 62. CMIE consumer sentiment expanding and at 92.9, is at its highest since the beginning of the pandemic. Both urban and rural sentiments improve to 92.2 and 93.1 respectively.
• At 11.6% YoY, GST revenue growth remains buoyant, with e-way bills clocking in 2.8 million per day in April.
• Trade balance improved to US$ -15.2 billion in April (versus -18.6 billion in March), as both Oil and Gold imports saw a drop. Overall exports have decreased 12.7% YoY, while imports saw a sharper 14.1% YoY fall in April. At US$ 13.9 billion, Services balance continued to be healthy. FX Reserves picked up from March, coming in at US$589 billion in April.
• In terms of flows, FIIs saw a net inflow of US$1.9 billion in April; similar to March. MFs withdrew some money in equities, with April seeing a net outflow of US$0.6 billion. This comes on the back of slower MF equity collections of US$1.9 billion in April (versus US$4.2 billion in March).
• India inflation cooled to 4.7% YoY in April, with core CPI also cooled to 5.2% YoY. US inflation fell for the 10th-straight month (4.9% YoY in April). US retail sales grew by a meagre 1.6% YoY in April (0.4% MoM), remaining negative in real terms. US unemployment came in 3.1% — lower than 3.6% in March. US money supply has now seen contraction for 6 months in a row (-3.4% YoY in April).
• Oil has dropped to $75/bbl — down from $81 as on April end. LME has also dropped off; currently at 3722 versus 3908 in April end. Gold continues to be high at $1,973 per ounce. Presently at 529, the CRB Food Index has remained more or less static in CY23 so far.